Exhibit 10.44
February 28, 2006
Chris Newman
Dear Chris:
I am pleased to offer you the
position of Chief Financial Officer and Secretary at Restoration
Hardware, Inc. (the “Company”). I’m
confident that you will find our Company to be an exciting and
challenging environment in which to work. This letter will confirm
the most important details of our offer to you.
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Title
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Chief Financial Officer and Secretary reporting
to the Chief Executive Officer.
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Salary
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$375,000 per year, paid bi-weekly.
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Bonus
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You will receive a signing bonus of $100,000,
which will be payable on the first payroll following your date of
hire. If you voluntarily resign or are terminated for
“Cause” (as defined in Attachment A ) on or
prior to the one year anniversary of your first date of employment,
you agree that you will reimburse the Company for a pro-rated share
of the signing bonus, which shall be calculated by dividing the
number of days you were employed by the Company by 365. You also
will be guaranteed a minimum bonus of $50,000 for Fiscal 2006,
provided your employment does not terminate due to your voluntarily
resignation or a termination for Cause before the end of Fiscal
Year 2006. In addition, you will be guaranteed a minimum bonus of
$50,000 for Fiscal 2007, provided your employment does not
terminate due to your voluntarily resignation or a termination for
Cause before the end of Fiscal Year 2007. Each bonus will be
payable when the Company distributes its annual incentive bonuses
to other senior officers for such fiscal year.
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Management Incentive Program
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You will be eligible to participate in the
Management Incentive Program. Your eligibility range will be up to
75% of your base pay. Your guaranteed bonus amounts (other than
your signing bonus) for Fiscal 2006 and Fiscal 2007 referred to
above will be credited against your actual bonuses for such years.
You will receive full plan details upon your arrival at the
Company.
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Stock Option Grant
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Subject to the approval of the
Compensation Committee of the Board of Directors of the Company,
you will receive 200,000 stock options at the fair market value of
our common stock on the grant date thereof, which will be your
first day of employment with the Company. Stock options will vest
at 25% per year, over a four-year period, and have a ten-year term,
with other terms being in accordance with the Company’s 1998
Stock Incentive Plan, as amended and restated October 9, 2002.
Your initial option grant will be an incentive stock option to the
maximum extent permitted under Section 422 of the Internal
Revenue Code
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In the event your employment with the Company
is terminated for any reason other than death, disability or for
Cause, you will have three months following your termination of
employment to exercise the vested portion of your initial option
grant. In the event your employment with the Company is terminated
for Cause, your initial option grant will terminate concurrently
with your termination of employment. In the event your employment
with the Company is terminated due to your death or disability, you
will have twelve months following your termination of employment to
exercise the vested portion of your initial option grant. In no
event may your initial option grant be exercised after the
expiration of its ten-year term.
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In addition, you will be eligible to
receive options or other equity of the Company on an annual basis
in accordance with the Company’s 1998 Stock Incentive Plan,
as amended and restated October 9, 2002. The type and amount
of equity of the Company that you will be eligible to receive in
any year in accordance with the Company’s 1998 Stock
Incentive Plan generally will be consistent with the type and
amount of equity that other similarly-situated senior officers of
the Company will be eligible to receive in such year.
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Severance
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Should your employment be terminated
“Not for Cause” (as defined in Attachment A
) by the Company, other than in connection with a “Change of
Control” (as defined in Attachment B ), you will
receive salary continuation for a period of one (1) year from
your termination date and a pro-rated bonus based on your then
current year’s incentive target bonus amount (the
“Bonus Amount”). In the event that you resign or are
terminated by the Company for Cause, you will not be eligible to
receive any severance pay. Your entitlement to any severance
payments will be contingent upon your execution of the
Company’s written release and expiration of any applicable
revocation period to the Company’s written release. (See
Attachment A )
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Change of Control
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Should there be a Change of Control
of the Company (See Attachment B ) and you, within 12 months
thereafter, are subject to an “Involuntary Termination”
(as defined in Attachment B ) by the Company, you will
receive, in lieu of any other severance pursuant to this offer
letter, salary continuation for a period of one (1) year from
your termination date at the annual rate of your base salary and a
pro-rated bonus based on the Bonus Amount. In addition, your
initial stock option grant will vest in full. Your entitlement to
any severance payments and acceleration of your stock option grant
will be contingent upon your execution of the Company’s
written release and expiration of any applicable revocation period
to the written release. (See Attachment A ) In addition, the
severance payments and benefits to be provided upon an Involuntary
Termination following a Change of Control are subject to the excise
tax payment provisions set forth in Attachment B.
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Non-Compete
Provision
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You acknowledge and agree that in
your role as Chief Financial Officer you shall acquire confidential
and proprietary information belonging to the Company. To preserve
and protect this information and the assets of the Company, and in
consideration of the severance and benefits provided to you under
this offer letter, you agree not to work in a capacity that would
compete directly with the Company, or solicit any employees or
customers of the Company, for a period of one (1) year
following the effective date of your resignation from or
termination by the Company for any reason, as set forth in
Attachment C . In the event that you breach this provision
all severance and other benefits shall cease .
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Car Allowance
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You will receive a car allowance of
$500.00 per month.
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401(k) Plan
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You will be eligible to participate
in the Company’s 401(k) Plan on the first enrollment
dates following your date of hire.
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Medical Benefits
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You will be eligible to participate
in the Company’s healthcare program per the Company’s
guidelines.
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Vacation
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15 days (3 weeks) per
year.
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2
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Employee Discount
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You will be eligible for a 40%
associate discount on merchandise of the Company.
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Miscellaneous
Benefits:
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You will be eligible for other
benefits as set forth in the relocation policy (and other policies,
if any) attached hereto as administered in accordance with the
Company’s customary practices and procedures.
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The language that follows reflects
our standard offer letter language. We do not mean for it to come
across as impersonal, but rather, as sound and necessary
information for you to know from the outset of your working
relationship with us. The relationship between you and the Company
is called “at-will employment.” This means that
employment with the Company is for no specific period of time. As a
result, either you or the Company is free to terminate your
employment relationship at any time for any reason, with or without
Cause. This is the full and complete agreement between us on this
term. Although your job duties, title, compensation, benefits, or
the Company’s policies, practices and procedures may change
from time to time, the “at-will” nature of your
employment may only be changed in an express writing signed by you
and the Chief Executive Officer of the Company.
Finally, your employment is
contingent on (a) you executing a Proprietary Information and
Inventions Agreement, (b) you providing the Company with legal
proof of your identity and authorization to work in the United
States at time of hire and (c) successful completion of a
routine background investigation and references check.
I am enclosing two copies of this
letter. Please sign and return one copy to me on your first day of
work and keep the other copy for your files.
Chris, we are very excited about you
joining the “Resto” team and look forward to your
contributions to the growth and success of the Company.
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Sincerely,
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/s/ Gary Friedman
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Gary Friedman
Chairman, President and Chief Executive Officer
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Þ
I understand and agree to the
terms of this offer of employment:
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/s/ Chris Newman
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March 6, 2006
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Chris Newman
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Date
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cc:
Associate’s File
3
Attachment A
Severance.
In the event that your employment is
terminated Not for Cause by the Company, other than in connection
with a “Change of Control” (as defined in Attachment
B ), you will be eligible to receive severance pay in the form
of salary continuation for a period of twelve (12) months from your
termination date with the Company at an annual rate equal to your
base salary and a pro-rated bonus based on your then current
year’s incentive target bonus, less in each case applicable
deductions and withholdings, payable in regular periodic payments
in accordance with the Company’s policy. (See Item D1 of
Attachment D ) You acknowledge that except as
expressly provided in this offer letter, you will not receive any
additional compensation, severance or benefits after your
termination of employment. You agree and acknowledge that your
right to receive the severance payments shall be conditioned upon
your execution of a release agreement with the Company containing
standard terms and conditions used by the Company at the time for a
general release by a senior officer of all claims arising from the
officer’s relationship with the Company. In the event that
the Company terminates your employment for “Cause” (as
defined below), you shall not be entitled to receive any of the
severance payments or benefits described above, and the Company
shall pay you all compensation due and owing through the last day
actually worked; thereafter the obligations of the Company under
this offer letter shall cease.
If you are subject to an Involuntary
Termination within 12 months following a Change of Control, you
will be eligible to receive severance pay in the form of salary
continuation for a period of twelve (12) months from your
termination date with the Company at an annual rate equal to your
base salary and a pro-rated bonus based on your then current
year’s incentive target bonus, less in each case applicable
deductions and withholdings, payable in regular periodic payments
in accordance with the Company’s policy. (See Item D1 of
Attachment D ) You also will receive full vesting of
your initial stock option grant of 200,000 stock options only. You
agree and acknowledge that your right to receive the severance
payments and acceleration of your initial stock option grant shall
be conditioned upon your execution of a release agreement with the
Company containing standard terms and conditions used by the
Company at the time for a general release by a senior officer of
all claims arising from the officer’s relationship with the
Company. In addition, the severance payments and benefits to be
provided upon an Involuntary Termination following a Change of
Control are subject to the excise tax payment provisions set forth
in Attachment B .
Definition of Cause and Not
for Cause. For purposes of determining your
eligibility for the above-described severance payments and
benefits, the Company may terminate your employment for
“Cause” if: (a) you exhibit persistent
deficiencies in performance or gross incompetence, (b) you
breach any material term of this offer letter or any other written
agreement you have with the Company, (c) you have been
convicted of a felony involving fraud or dishonesty, (d) you
die or suffer from a “Disability” (as defined below)
during your continued employment with the Company, (e) you
intentionally and continually fail to substantially perform your
reasonably assigned duties with the Company (other than a failure
resulting from your assignment of duties that would constitute an
“Involuntary Termination” (as defined in Attachment
B ) following a Change of Control), which failure continues for
a period of at least thirty (30) days after a written notice of
demand for substantial performance has been delivered to you
specifying the manner in which you have failed substantially to
perform, or (f) intentionally engaged in conduct which is
demonstrably and materially injurious to the Company; provided,
that no termination of your employment shall be for Cause as set
forth in clause (f) above until there shall have been
delivered to you a copy of a written notice setting forth that you
were guilty of the conduct set forth in clause (f) and
specifying the particulars thereof in detail. No act, nor failure
to act, on your part shall be considered “intentional”
unless you have acted, or failed to act, with a lack of good faith
and with a lack of reasonable belief that your action or failure to
act was in the best interest of the Company.
For purposes of this offer letter,
the term “Not for Cause” shall mean termination of your
employment by the Company for reasons other than for
“Cause.”
A-1
Termination by
Employee. In the event that you elect to terminate your
employment for any reason other than in connection with an
Involuntary Termination within 12 months following a Change of
Control,
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